Wall Street looks set to give back most of yesterday’s gains as markets digest both the news of progress in US-Chinese trade talks and the fact that some better than expected US economic data is once again calling into question the idea that the Fed will show as much willingness to relent over interest rate policy in the second half of the year as the market had been hoping for.
With US data releases set to take a breather today and the week ahead potentially subdued a little by the 4th July holidays, there may now be justification for a period of consolidation in the near term, although further detail of what any trade compromise may look like – and specifically whether US companies stand to gain from the outcome – has the potential to initiate another round of selling.
Looking further ahead, tomorrow’s US factory order data for May is likely to be under close scrutiny as a modest decline here will be pointing towards more evidence of the damaging effects of the trade war, although would likely fall short of encouraging any policy easing and again have the potential to drag on stocks.
Ahead of the open, the market is calling the Dow to start down 22 at 26695 and the S&P 500 down 2 at 2962.